Windstream Communications (NYSE:WIN) continues to nibble away at the RLEC market. Today the company bought Lexcom, a tiny triple-play provider in Lexington, North Carolina, whose 23,000-access-line network is contiguous with Windstream’s own.
Windstream is paying $141 million in cash. According to Stifel Nicolaus, the price is 3.2 times Lexcom’s 2008 revenue, nearly six times its EBITDA before synergies and nearly five times its EBITDA after synergies.
Windstream is in need of some larger M&A than this. The carrier has missed out on some major deals in the past year — instead acquiring relatively small D&E Communications and shedding its distribution arm — and is now dwarfed by CenturyLink and Frontier Communications (taking into account their recent deals).
Windstream may have courted Frontier and Embarq (now CenturyLink) before their respective deals. But now analysts say any major RLEC M&A will likely be on hold until the assets from the most recent major deals have been integrated.